I think there are too many types. I don't use 10¢, 50¢ coins, nor do I use $2 $10 $50 bills. Why?

I think what I want is for each size to be 4 or 5 times as big as the previous size. My simplicity-preferring brain doesn't like to see a $2 bill when two $1 bills is not that much more to carry. I don't like to use a $10 bill instead of two $5 bills. Carrying five $1 bills is a bit much and then I'm happy to carry a $5 bill instead. Two or three isn't enough to trigger this desire; four or five is enough.

If we started with 1¢ and stepped up by a factor of 4 or 5 each time, then the sequence would be 1¢ 5¢ 25¢ $1 $5 $20 $100. These are the ones I actually use in practice. For Euros we could have 1c 5c 20c €1 €5 €20 €100 €500.

Let's drop 10¢ coins and $10 bills and treat them like 50¢ coins, $2 bills, $50 bills — they exist but we don't use them widely.

4 comments:

Actually, 50 cent pieces are mostly out of circulation, but 1 dollar coins are somewhat common. The mint has been trying to replace the 1 dollar bill with the dollar coin for a while, though not very successfully. They also want to get rid of the penny.

I think 1, 2, 5 is generally the best sequence of values, and most new currencies more or less follow it. $0.01, $0.02, $0.05, $0.10, $0.20, $0.50, $1, $2, $5, $10, $20, $50

The reason is that sequence you can break a note and get 4 or 3 pieces of change all in the same order of magnitude. Most other sequences if you break a bill you get up to 6 pieces, some of which may be very small and you probably don't want. Or you break the bill and get gaps where you don't get a certain denomination of change you might want.

Using the 1, 2, 5 sequence: If you want to break a $10, it's a $5, two $2's, and a $1.If you break a $5, it's two $2's and a $1.

On the other hand, if you use the actual USD sequence, then if you try to break a $10 you get:1 $5, and 5 $1's.Which is 6 notes.

It's even worse if you try to break a $1. You get:3 $0.25's, 2 $0.10's, and 1 $0.05.Which is 6 coins and the 5 cent pieces are so small you probably don't want it.

Of course, in reality we just break a $1 into 4 quarters, and throw the dimes, nickels and pennies into a jar because they are too annoying to deal with. If we replaced quarters with 20 cent pieces, it would make dimes more useful since they would make change with the 20 cent piece more easily than they do with the quarter.

Brendan - thanks for the comment! Yes, I think you and I are different in that I'd rather have more bills of fewer types, and you'd rather have fewer bills. I wouldn't even have $10 bills, but if I was breaking a $20, I'd get 4 $5s, and if I broke a $5 I'd get 5 $1s.